Correlation Between Agro Capital and Alliance Recovery

Can any of the company-specific risk be diversified away by investing in both Agro Capital and Alliance Recovery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Agro Capital and Alliance Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agro Capital Management and Alliance Recovery, you can compare the effects of market volatilities on Agro Capital and Alliance Recovery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Agro Capital with a short position of Alliance Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Capital and Alliance Recovery.

Diversification Opportunities for Agro Capital and Alliance Recovery

-0.17

Correlation Coefficient

Agro Capital  Alliance Recovery

Good diversification

The 3 months correlation between Agro and Alliance is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Agro Capital Management and Alliance Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Recovery and Agro Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Agro Capital Management are associated (or correlated) with Alliance Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Recovery has no effect on the direction of Agro Capital i.e., Agro Capital and Alliance Recovery go up and down completely randomly.

Pair Corralation between Agro Capital and Alliance Recovery

If you would invest  1.12  in Agro Capital Management on September 1, 2024 and sell it today you would earn a total of  1.11  from holding Agro Capital Management or generate 99.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Agro Capital Management  vs.  Alliance Recovery

Agro Capital Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Capital Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Agro Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Alliance Recovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Alliance Recovery is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agro Capital and Alliance Recovery

The main advantage of trading using opposite Agro Capital and Alliance Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agro Capital position performs unexpectedly, Alliance Recovery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alliance Recovery will offset losses from the drop in Alliance Recovery's long position.

The idea behind Agro Capital Management and Alliance Recovery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.